1. Write this out as if you were giving it to a potential business partner and then respond to your classmates as if you were that business partner. (1 paragraph-5 sentences)

My business sells and makes face masks: What are some of the variable costs, fixed costs, mixed costs? What are some of the product costs versus period costs? What are the direct materials, direct labor, manufacturing overhead costs?

2. Please you the mask company from the first paragraph to answer this question: 1 paragraph(5 sentences)

Cost-Volume-Profit(CVP) Analysis is quantitative. Show how by making changes, profit increased. If your company was headed in a similar direction, how would you respond from a qualitative perspective? In other words, what factors could influence the CVP decisions other than the numbers?

ANSWER

Business Proposal and CVP discussion

For the face masks company, the variable costs would entail the costs of raw materials and the packaging of the masks would change when the production output increases or decrease. On the other hand, the fixed costs for the masks business would include costs such as salaries for the workers, insurance payments, and property taxes, which do not change despite an increase or decrease in the production of the masks (Mas & Pallais, 2019).  Mixed costs for the company would include bills such and electricity, water, and gas, where their changes can be variable for any over the base amount.

The mixed costs for the face masks would be attributes of both variables and fixed costs, where it can change with the volume of production but cannot be eliminated.  For the face masks company product costs will entail those that are directly related to the face masks, which include office supplies, utilities, and rent (Mas & Pallais, 2019). On the other hand, the period costs will entail the indirect costs increased in the production of the face masks such as marketing and sales expenses. manufacturing overhead entails depreciation on factory equipment, factory insurance, factory rent, and factory property taxes, and factory utilities.  Direct materials on the other hand entail materials used for making the product, such as cotton and other materials that will be used for making the masks.  Direct labor costs will include salaries and wages for the workers who will be working in the company.

Cost-Volume-Profit (CVP) Analysis

Cost volume price analysis entails how a change in variables and fixed costs can affect the product of the company.  Making changes in costs, and processes can result in profit-making for the company (Abdullahi, Bello, Mukhtar, & Musa, 2017). On the other hand, from a qualitative perspective CVP analysis, the factors to be figured in, include making projections, analysis of planning, and decision-making processes by the company.

References

Abdullahi, S. R., Bello, S., Mukhtar, I. S., & Musa, M. H. (2017). Cost-volume-profit analysis as a management tool for decision making in small business enterprise within Bayero university, Kano. Iosr Journal Of Business And Management (Iosr-Jbm), 19(2),.

Mas, A., & Pallais, A. (2019). Labor supply and the value of non-work time: Experimental estimates from the field. American Economic Review: Insights, 1(1), 111-26.